Novelis expansion gives CNY county plagued by unemployment a cause for celebration

Dennis Nett / The Post-StandardThe Hot Mill at one of the Novelis Inc. buildings in Scriba, where aluminum sheets are rolled. The company announced Monday it has started a $200 million expansion and plans to hire 100 more workers in Oswego County.

Syracuse, N.Y. -- Novelis Inc. began a $200 million expansion Monday of its aluminum manufacturing plant near Oswego, a project that promises to create 100 jobs in a county plagued by high unemployment.

The plant on county Route 1A in Scriba employs 651. Novelis said it expects to hire 100 new engineers, production workers and maintenance personnel over the next two years, leading to the startup of two new high-performance aluminum processing lines in the summer of 2013.

Novelis, the world’s largest producer of rolled aluminum and Oswego County’s largest manufacturer, said it will build a 192,000-square-foot addition to the 1.4-million-square-foot plant to meet escalating demand for aluminum sheet in the United States.

As part of the expansion deal, Novelis will receive a one-time state grant of $5 million and property tax breaks for two decades.

Novelis said the expansion will allow the plant to produce an additional 440 million pounds of aluminum sheet a year for the automotive industry, five times the company’s current North America capacity for producing aluminum sheet for that industry. Currently, about half of the aluminum produced at the plant is sold to the makers of beverage cans and the other half to the building, construction and automotive markets.

Local economic development officials said the expansion is the largest by a manufacturer in Central New York in some time.

“That’s a big investment,” said Robert Simpson, president of the Corporation for Economic Opportunity. “I hope it means people are looking at New York again as a place to make investments.”

Dennis Nett / The Post-StandardThe Hot Mill at one of the Novelis buildings where aluminum is rolled after it has been pounded and rolled out from aluminum ingots.

Luc Boivin, manager of the Novelis plant, said automakers are using more aluminum in their vehicles to make them lighter and more fuel-efficient without reducing size. He said the company expects automakers to use 25 percent more aluminum in their vehicles in the next five years to meet higher fuel economy standards being developed by the U.S. Department of Transportation and the Environmental Protection Agency.

Novelis said it controls more than 50 percent of the global market for aluminum sheet used for making structural components and exterior body panels. Its aluminum is found in 117 vehicle models produced by automakers around the globe.

The state said it will give Novelis a $5 million grant to assist with the purchase and installation of machinery and equipment at the plant. In return, the company pledged to hire 100 new, full-time employees by Jan. 2, 2017, and retain the 651 existing employees. The state will be entitled to recoup all or part of the grant if the company fails to meet its employment goals.

In addition, the Oswego County Industrial Development Agency agreed to provide property tax discounts on the expanded section of the plant for 20 years. L. Michael Treadwell, CEO of the agency, said the company will receive a 75 percent exemption on taxes on the expansion for the first five years and a 60 percent exemption in the second five years. After that, the exemption will shrink every two years until it is gone in year 20, he said.

The company will also receive an exemption from sales and use taxes on construction materials, he said.

The plant in Scriba is the largest of the company’s 14 fabrication plants in the United States and Canada, producing more than a billion pounds of high-quality aluminum sheet each year, according to the company’s website.

Boivin said the company considered its other North American plants but chose the Scriba plant for the expansion because it is in the United States (the market it will serve), has the required distribution logistics and has a high-quality workforce.

“We have very good, committed people,” he said.

Alcan Inc. opened the plant in 1963. Novelis spun off from Alcan in 2005 and was acquired in 2007 by Hindalco Industries Limited, the flagship company of the Aditya Birla Group, a multinational conglomerate headquartered in Mumbai, India. It is now a wholly owned subsidiary of Aditya Birla Group.